Boparan Restaurant Group (BRG) has confirmed that 27 of its 70 Ed’s Easy Diner and Giraffe sites are expected to close as part of Company Voluntary Arrangement (CVA).
The proposed CVA for BRG subsidiary, Giraffe Concepts Ltd, would also see reduced rents sought in a further 13 sites. The group said there was every intention of continuing to trade in the other restaurants if the CVA was approved.
While the exact locations earmarked for closure have not been confirmed, they take in 20 Giraffe restaurants and seven Ed’s Easy Diners.
Succesful approval of the CVA would trigger a fresh injection of funding from BRG.
BRG has been working with KPMG since the start of the month to examine its options for the brands, which were both acquired as distressed purchases in 2016.
In a statement this morning, the company said that while there had been some improvements in sales over the past two years, some unprofitable stores remained and a CVA was now the only option.
Tom Crowley, chief executive of BRG, said: “We have been examining options for the two brands for some time and the CVA is the only option to protect the company.
“The combination of increasing costs and over-supply of restaurants in the sector and a softening of consumer demand have all contributed to the challenges both these brands face.
“The directors believe we have all the ingredients to drive a successful turnaround of the group and can confirm we have negotiated a comprehensive refinancing package to support that turnaround which will become available if we can secure the necessary support from our creditors.”
KPMG partners Will Wright and David Costley Wood have been appointed joint nominees.
Wright said: “This CVA seeks to address the cost of the company’s leasehold obligations across a number of unprofitable sites, and if successful, will put the business on a surer financial footing. Importantly, it constitutes one element of a wider financial and operational turnaround plan which, subject to the CVA’s approval, will see an injection of funding into the business from the company’s majority shareholder.”
BRG’s other brand’s, Harry Ramsden’s, Fishworks, the Cinnamon Collection and a franchise agreement with Slim’s Chickens, are unaffected by the process, the company stressed.
Giraffe Concepts needs to secure at least 75% creditor approval for the CVA for it to proceed. A detailed proposal document is expected to be made available to creditors via a dedicated website today, with a vote due on 21 March.